Prices of prime land in Singapore are high. It may trend even higher as land supply shrinks further down the road.

Referencing the S$383 million price tag CDL paid for its Gramercy Park 170,000 sq ft site just off the Orchard Road shopping belt, the company predicted “future stock in this area is expected to price higher.”

“In land-scarce Singapore, it is increasingly difficult to secure prime land of this scale,” City Developments Ltd said in its earnings statement. “Even if available, the asking price for land alone is exorbitantly high.”

City Developments said because it was fortunate to have secured the freehold Gramercy Park site in its earlier years, it could afford to market it at current market rates,

Singapore is the most expensive place in the region to buy a luxury home after Hong Kong, according to a Knight Frank 2016 wealth report.

PROPERTY prices in prime districts ended the year stuck in the doldrums, leaving luxury housing as the worst performing segment of 2013.

Luxury home prices fell by 2.1 per cent last year - reversing the 0.8 per cent rise recorded in 2012.

The decline has been slow and steady and began in the second quarter, when city-centre prices fell 0.2 per cent from the first three months of the year.

They fell again - down 0.3 per cent - in the third quarter and dropped a far steeper 2.2 per cent for the three months to Dec 31, according to Urban Redevelopment Authority flash estimates yesterday.

Although prices of city-centre homes have been under pressure since the global financial crisis, property consultants attributed the 2013 decline to competitive pricing at new launches and cooling measures.

It was a different story in the city fringes, where prices rose 0.3 per cent last year, although that was modest compared with the 1.6 per cent increase in 2012 from 2011.

Suburban prices registered the steepest increase at 6.8 per cent last year over the preceding year, slightly up from the 6.5 per cent in 2012 over 2011.

Knight Frank research head Alice Tan said the additional buyer's stamp duty (ABSD) implemented in January last year has made investors think twice about buying property.

The duty - 5 per cent for permanent residents (PRs) buying their first home and 7 per cent for Singaporeans buying their second - has had a pronounced impact on the luxury home market, which has been buoyed by investor demand, said Mr Nicholas Mak, research head of SLP International.

Cautious buyers are now investing in foreign property or cheaper suburban homes.

Tighter lending guidelines have also made it tougher for buyers to afford pricier properties, which are typically found in the city centre, said Century21 chief executive Ku Swee Yong.

Developers have reduced selling prices of city-centre properties in response, causing a dip in prices, said Ms Chia Siew Chuin, director of research and advisory at Colliers International.

At DUO Residences in Bugis, 600 units were sold at a median price of $1,999 per sq ft (psf) in November, markedly lower than other city-centre projects, where median prices ranged from $2,500 to $3,000 psf.

Ms Tan expects city-centre prices to continue to slide this year given that there are still about 10,500 unsold units on the market.

And developers will still have to adjust selling prices, amid the cautious sentiments caused by the ABSD and lending curbs, she said.